Questions related to Economic Inequality
Tax cuts to the rich is the prefer idea on how to promote and expand economic growth in supply side economics despite knowing it does not work as expected. Yet, this policy is usually the first choice in supply side run democracies like in the USA or now the UK when supply side promoters are in power.
Any policy that worsens inequality should be expected in practice to negatively affect economic growth as under extreme inequality or worsening inequality the traditional trickle down should be expected to be mute or not to work as intended. And this raises the question, tax cuts to the rich and the embudo effect, is that why the trickled down effect does not work as intended?
What do you think?
I will need more insights and justifications into using "per capita consumption expenditure" as a measure of poverty.
Please refer me to applicable papers.
Thanks as always.
The past month or so has been super busy as I've moved my lectures from the classroom to the virtual video meeting "room" while naturally been concerned about student welfare. Yet, this new "Coronavirus condition" has forced me to pause for reflection. The result is that I appear to be less preoccupied with conceptual or theoretical questions than with more empirical questions that can demonstrate impact and help to combat suffering or social evils.
The Investment Redistributive Incentive Model (IRIM).
Tourism holds the hopes of many in creating job opportunities for the masses of the unemployed globally. The poor growth of economies has failed to address the problems of unemployment, poverty and inequality. For growth to be impactful, foreign direct investment is considered one of the sources of the required impetuses. It is possible to incentivize both foreign (direct) and local investments. This paper, which was prepared using secondary sources of information, argues that it is possible to introduce incentives linked to investments in what is posited as the Investment Redistributive Incentive Model (IRIM). The IRIM rewards companies that support local ownership and control of enterprises through an incentive system en route to total liberation/local control of enterprises in whole geographic areas as the ultimate goal. The IRIM uses investment incentives such as tax cuts, breaks or relief as redistributive instruments to effect change through the reconfiguration of the management and ownership structures of companies. IRIM could be applied in any company, large or small, for equity and social justice. Foreign investors could also be linked to educational institutions in relation to facilitating the supply of skilled workers. Redistributive formulas become imperative to avert the various forms of societal dissonance because current trajectories are not sustainable where only a few get rich while the majority remain poor in a world trapped in a capitalistic and narcissistic modus operandi.
From a recent world-wide study, that I was part of, that was the conclusion, putting it perhaps too bluntly. It was fascinating to be part of this expert commission but now the question is: what is to be done?
I am looking for a validated survey tool to track changes in participants' notions of power and inequality in society. Rather than reinventing the wheel, I am wondering if anyone has, or has used one that I may be able to draw from in an upcoming study.
In an open and globalized economy and considering the financial markets influence, I ask for your collaboration, from a theoretical point of view, to propose economics postulates that can reduce social inequality and give better solutions to complex problems such as sustainable growth and the equitable distribution of wealth. Thank you in advance.
On returning from a visit trip collecting stories and making college class visits at Purdue University and Indiana University regional campuses in northwest Indiana, I have been weighing the state of publishing and whether writers from the "Rust Belt" "Flyover Zone" have a hope of being read outside their local region. This is not only applicable to the United States "Rust Belt" and "Flyover Zone" but analogous zones across the planet.
A key to Thorstein Veblen's theory of "conspicuous consumption" in his study _The Theory of the Leisure Class_ is social emulation. Each narrow band of socially-stratified society looks up to a slightly higher band and embarks on a furious program of "emulation" or mimicking their "betters." And when this is accomplished the active agent moves on to emulate a higher rung. Veblen helpfully supplies comparisons to bird behavior and the rituals of pre-industrial society, such as the Inuit "potlatch" as analogous to the upper-class debutante's "coming out" ball.
LINK to Veblen's text: https://www.gutenberg.org/files/833/833-h/833-h.htm
So, in the United States instance, any editor in New York or on the East Coast will see a less-status-y setting and instantly know "Sorry. This is not for us. Good luck elsewhere." Yes, taste matters. As Veblen writes, "a beautiful article which is not expensive is not accounted as beautiful" ("Theory" 132). With a slight shift, we might add that "a beautiful text not placed in an expensive setting is not beautiful."
What effect upon cognitive development and the mental evolution of creative writers does this process entail? The embodied subject so often enthusiastically dissected in pages of the Modern Language Association journal says little about the bodies and Foucaultian embodiment in the "Flyover Zone" or "Rust Belt," although I have addressed the issue by starting a "Rust Belt Literature" group in the MLA online commons. The same "emulative" avoidance seems to be at work since our new "Rust Belt Literature" MLA group is relatively low-traffic. Seven members at last count. MLA groups for the lesser poets of the Scottish Hebrides of the late 18th Century often boast more members than this.
Some creative writing students have devised work-arounds such as (1) pretending to have lived in Paris or (2) writing in a vacuum where characters walk in a vague setting like dry ice fog in a low-budget film to disguise the less-status-y real setting. These texts show some initiative and focus in CW students. However, perhaps, creative writing classes could find a more accurate name in flyover country such as Evasive Writing? Does Veblen fit?
Is the Indian-born cultural theorist Gayatri Spivak's "subaltern" theory a valid approach to the US Rust Belt dominant narrative?
This question grows from the study of symbolic conversion theory and the work of Gayatri Spivak on inequality and voice. especially her landmark essay "Can the Subaltern speak?"
Ernest Bormann called words and phrases applied to people, events, and places not present "fantasy themes." These themes tend to cluster into positive groups around one's own region or group and negative clusters around "the other."
When a group of people or a region is named with what Bormann would describe as negative "fantasy themes" by outside media, are they colonized by economic and media to the extent that they have been effectively silenced? The very fact that the US Rust Belt region and its inhabitants have no voice in the US media then be cited as evidence that they are incapable of articulating a narrative for themselves and may be described with external narratives with no necessity of dialogue.
So is this rhetorical situation the beginning of a true caste system?
The dirty jobs are not only held in disdain by traditional elites but also progressive ecology-minded media. Thus, the dominant narrative follows that omission is acceptable and that there is no need to hear from this region, the rhetorical construct called The Rust Belt.
Spivak usually is cited for Western colonial issues but can this sort of silence be analyzed rhetorically by her methods?
I quote from the Columbia University economist and Nobel Laureate, Joseph Stiglitz:
Asymmetries of Information and Economic Policy
This year's Nobel Prize in Economic Sciences went to George Akerlof of the University of California at Berkeley, Michael Spence of Stanford University, and myself for our work on "asymmetry of information.'' What is that work about and why did we undertake it?
For two hundred years, economists used simple economic models that assumed that information was perfect - i.e. that all participants have equal and transparent knowledge of the relevant factors. They knew that information wasn't perfect, but hoped that a world with moderate imperfections of information would be akin to a world with perfect information. We showed that this notion was ill-founded: even small imperfections of information could have profound effects on how the economy behaved.
The Nobel committee cited our work on `"asymmetries of information,'' an aspect of imperfections of information caused by the fact that different people in a market know different things. For example: the seller of a car may know more about his car than the buyer; the buyer of insurance may know more about his prospects of having an accident (such as how he drives) than the seller; a worker may know more about his ability than a prospective employer; a borrower may know more about his prospects for repaying a loan than the lender. But asymmetries of information are only one facet of information imperfections, and all of them - even when small - can have large consequences.
George Akerlof and I were classmates at MIT in the early 1960s. We were taught the standard models of the day, but they made little sense to us. These models rather simplistically said that demand equaled supply. The joke was that you could teach a parrot to be an economist simply by repeating "demand and supply.'' This produced rather curious results. If the demand for labor equaled the supply, for example, there couldn't be any unemployment.
Part of the interest of the concept for policy studies is the implication that under conditions of asymmetric information, market economies perform poorly; and presumably, the greater the asymmetries, the worse the performance. There is reason to think that asymmetries of information have been growing quite significantly.
Last weeks, thousands of persons around the worl protested against the regression of the consideration for scientific research in the world. Indeed, even in developped countries, politics consider less and less science and scientists. Is it the case in your countries? how can we improve this consideration?
Looking forward your feedbacks
It is a fact that richer countries have financial structures which are more biased to financial market, while poorer countries are more bank-dominated.
In the following picture, in the horizontal axis from left to right they are high-income OECD countries, high-income nonOECD countries, upper-middle-income contries, lower-middle-income countries and low-income countries, respectively. The vertical axis is financial structure and higher value represents more finacial market dominated. We can see from the picture that roughly financial market is more important in richer countries than in poorer countries. But, why high-income nonOECD countries have a finacial structrue that is more market dominated that high-income OECD countries?
How can we explain this phenomenon?
Social closure is an important mechanism leading to inequality in life outcomes. We are particularly interested in items measuring how people feel about processes of social closure, to what extent they feel them legitimate or not.
As New York has mapped the income levels along individual subway lines, earnings range from poverty to considerable wealth, namely income inequality exist obviously.
But how and when such inequality form along the time, i.g. before, in the middle and after the construction of metro? The procedure is rather complex, relating with the change of accessibility, spillover of land price and house price, agglomeration of economic activities, increase of commercial and housing investment, job attraction, etc.
Does this inequality has a spatial pattern? That is the spatial difference of the degree of inequality between the regions near to the metro and the ones slightly far away from the metro. And how does spatial pattern of income inequality evolve or change before, in the middle and after the construction of metro? Maybe the evolution of such income inequality will be impacted greatly by the density of metro, gentrification, sub-urbanization, urban renewal, built environment, etc.
How does transport infrastructure within city, such as metro, affect the urban economic growth? Will it further result in spatial social/economic inequality? If it will, what is the process?
My PhD research has taken off and my interest is on "financial reforms and income inequality in Africa (1980-2015)". Thus, I'll appreciate if anyone can suggest to me papers bothering on general theories of income inequality.
However, to streamline my arguments, I'm focusing on an aspect of financial reforms which is the availment of credit facilities to households, so theories specific on credit and income inequality will be most appreciated.
Also, I'll welcome anyone that is interested in collaborative work regarding this research.
Thanks as always as I await responses.
Dear research community I am working on my PhD dissertation and my topic is "urban sprawl, infrastructure deficiency and economic inequalities with evidence from Karachi". can I have suggestions regarding quantifying the urban sprawl and subsequently applying the model on causative variables i.e infrastructure deficiency and economic inequalities.
According to Frances Stewart, horizontal inequalities (inequalities between groups) in its various dimensions (economic, socio cultural and political ) are the main sources of conflict in most conflict stricken countries. It is argued that economic inequalities provide fertile ground for conflict, socio-cultural inequalities bind groups together, and political inequalities provide incentives for leaders to mobilize people for rebellion. Is there a threshold of the extent of such inequalities ( in one or all dimensions) beyond which it spur grievances and mobilize people leading to conflict ? or is it the mismatch between these three dimension driving the violent conflict?
Minimum wages are calculated by interpreting national laws. As the recent EC statistics shows (attached), the results are quite questionable.
- Russia has a lower minimum wage than Ukraine but people earn
three times more in average in Russia.
- Germany seems to have a competitive minimum wage, but only if
you have a 38-hours-contract. Today 12 million employees work
part time, many for 450 Euro only ("Minijob").
- Slovenia seems to have a very low minimum wage. But in Slovenia
people earn more than in any other Eastern European country.
- Italy doesn't have a minimum wage but in many parts of Italy people
earn like in Austria and Germany (Lombardy, Venezia, Toscany, Rome)
- UK seems to have the highest average income. But the costs for living in
UK - despite the low taxes - are much higher than e.g. in Germany,
Belgium and Netherlands.
These are only examples. Does it make sense to compare minimum wages without considering the real labour conditions and the price reality?
Concentration of output, wealth, and assets has no limits as of yet. The market economy does not favor either of the binding upper and lower benchmarks. But the consequences are really painful for the humanity. Can't be there any understanding among the economists and other social scientists on the limits of inequality which can be enforced institutionally?
I am struggling in a purely abstract way with the question of the relationship between income distribution and the type of goods produced in an economy. If someone has an idea or a good reference I'd be happy to know about it.
Undernourishment means that a person is not able to acquire enough food to meet the daily minimum dietary energy requirements, over a period of one year. FAO defines hunger as being synonymous with chronic undernourishment. Higher economic growth has not been fully translated into higher food consumption.
Is there a contradiction in policy recommendations with regard to capital taxation?
The classic Chamley-Judd result suggests that capital taxes should be zero in the long run. Straub and Werning revisit this result and come to a different conclusion. Furthermore, scholars like Piketty or Benhabib suggest to use capital taxes to reduce rising wealth inequality.
I need a recent measure of income inequality by Metropolitan Statistical Area. I found a source for the top 50 MSAs, but I'd like ALL MSAs. More difficult would be a way to find or calculate the means of each quintile and the top 5%. I'm using the IPUMS ACS 2007-11 5-year sample, and I've dropped the missing values (coded 9999999), but I'm not sure if I should include negative HH incomes as well.
I might be open to using a GINI coefficient instead if anyone knows of a recent list by MSA.
Any suggestions? Thanks!
The Yitzhaki index of relative deprivation mathematically relates to the Gini index of income inequality. If we scale the Yitzhaki score to 0-1, then the average Yitzhaki = Gini. So is it possible to estimate a “synthetic” Yitzhaki score for an individual in a survey when the only variables available are: (1) individual income, (2) average income of the individual’s neighbourhood, and (3) Gini index of the neighbourhood. I cannot calculate the Yitzhaki in the normal way because I haven’t done a census. Any help would be appreciated. thanks
I am now reading Piketty's Capital in the 21st Century. It is a wonderful statistical research work and should be a model that all economists must learn from it. I have no intention to throw any doubt on his fact findings.
My question is concerned with the logic which connects the fact r >g and the rising inequality of income and wealth.
In the Kaldor-Pasinetti framework of growth and distribution, we have the following long run relation
g = scr,
where sc stands for the capitalists' propensity to save (I omit all the necessary conditions for the validity of this equation). See equation (14) of Pasinetti (1962) Rate of Profit and Income Distribution in Relation to the Rate of Economic Growth. Review of Economics Studies 29(4): 267-279. , p.272) .
In this case the rate of investment and by consequence the rate of accumulation of capital is equal to the growth rate. Then capital assets or the total wealth grow at the same rate as the total income and therefore the workers' income (if we assume that workers' share in the income remains constant).
Can anyone explain Piketty's logic? I want to know in what sense Piketty calls relation r>g the driving force of rising inequality.
Sen states that a person's position in a social arrangement can be judged in two different perspective. One he called the actual achievement and other is the freedom to achieve. achievement is concerned with what we manage to accomplish, and freedom with the real opportunity that we have to accomplish what we have value. He argument that the two need not be congruent. Inequality can be viewed in terms of achievement and freedoms. they are not coincide. The distinction between achievement and freedom is central to social evaluation.
Now we turns on real issue. Most of the economies is living in the atmosphere of capitalist rule, who advocates the equal opportunity to each person. The real behavior is just opposite. It creates a lot off inequality in the society and abandon the individual access to resource. Thus, the opportunity of real and equal opportunity disappeared. The question is how can real opportunity be materialized in a capitalist economy?
The income disparity in most of Africa and the developing world is a major problem to development, and improve in the lives of their people.
It is no doubt, that in most of the developing countries the incomes differences between the low income earners and high income earners are high leading to the poor getting poorer and while the rich are getting richer. This is complete quagmire to development.
I am looking for the GINI coefficients (any year will do at this point) for the following countries: Montserrat, Grenada, United Arab Emirates, Anguilla, Barbuda, Dominica, Myanmar, Cayman Islands, Libya, Niue, Oman, Tonga, Cook Islands, Kiribati, Kuwait, Nauru, Solomon Islands. Recommendations for sources, citations, or lesser known databases are welcome.
Is Gini coefficient the only way to measure inequality? Are there some superior measures i.e. that can provide some more details?
Piketty proposes a simple underlying equation r>g, meaning that the return on capital (property, stock and other forms of ownership) is consistently higher than economic growth.
Piketty strongly suggests that the structures of capitalism are not only regenerate worsening inequality, but now drive us toward a system of economic peonage and political autocracy.
2015 -The MDGs end year is few miles away and propositions are on top gear for the SDGs. The challenge is that most of the promises latent in MDGs have not being achieved (up to the desired targets). The question now is: what can developing countries learn from the MDGs and how can they better equpped/aligned for the SDGs
Marcel Lenoir (1913) found that the price of gold was the same in 1800 as in 1910, with a 2.8% increase from the mines of the world. Since 1970 gold has dramatically increased and yet inequality has grown dramatically and wages stagnated, while asset classes have exploded in value. Related?. Lenoir, Etude sur la Formation et le Mouvement des Prix, Paris, 1913.